What You Need to Know about the New Beneficial Ownership Business Account Requirements

Beginning on May 11, 2018, The Financial Crimes Enforcement Network (FinCEN) will require all financial institutions to obtain information from business customers on who has Beneficial Ownership interest in their organization. 

The purpose behind the rule is to help our government safeguard the financial system from illicit use and fight financial crimes such as money laundering by collecting beneficial ownership information at account opening.

“To comply with this law, your bank will be asking the person that opens your new business account, or is responsible for the management of your existing business account, to complete a certification form. Typically, the certification form is completed in person at the business location, the bank, or a title company in the case of a loan closing. It’s a brief 2-page form which can be completed in just a few minutes,” says Mary Schuh, Leaders Bank VP Operations/BSA Officer.

  • What qualifies as an account? An account is a formal banking relationship established to provide or engage in services, dealings, or other financial transactions.  Examples include deposit accounts, transaction or asset accounts, and loans.  Loan renewals and other changes in terms qualify as new accounts under the rule--the certification form will need to be completed again with the new information.
  • Banks are required to obtain beneficial ownership from legal entity customers. Who is that?
Legal Entities  Entities Not Covered
Other entities established by filing
a public document with the Secretary
of State or other similar office 
 Sole Proprietorships
Unincorporated associations
Department or agency of the United States
Entities listed on the NYSE or NASDAQ
Natural persons (individuals) opening an 
account on their own behalf


The certification form will ask for the name, address, date of birth, and social security number for the beneficial owners of the company.  This includes:

  1. Any individual who directly or indirectly owns 25% or more of the equity interests of the legal entity, and
  2. One individual with significant responsibility for managing the legal entity, such as a CEO, COO, President, etc.

While some companies may not have any owners with 25% or more ownership interest (under #1), all companies must provide information on an individual with significant managerial control (under #2).  It is also possible that the same name could be listed in both sections.

Your financial institution will require a copy of the driver’s license or other identifying document for each person listed on the form. A retail bank representative or loan officer can usually answer any questions about completing the form.


How to Know if it’s Time to Change Community Banks

A business owner missed a lucrative order because she couldn’t get an increase in her line of credit fast enough from her community bank. This was indicative of her bank’s lack of responsiveness to her needs. She vowed then and there to change banks. 18-LB-542 bank blog photo

The realization you can’t count your banker among your most trusted and dependable advisors serves as a signal to switch community banks. Other telltale signs can include your bank’s refusal to lend you funding necessary to expand (even when you have excellent credentials), its interest in only serving larger companies, its failure to match your company’s growth, or a lack of stability or responsiveness among its lending officers.

Here are more key signals to determine if the time’s right to switch banks.

  • Failure to grow. You enjoyed your business banking relationship years earlier. But over time, your community bank hasn’t kept pace with your company’s growth. Now your needs exceed its legal lending limit. It’s time for a banking change.
  • Passed over. Your community bank clearly has its eyes on a bigger prize. You sense the bank seeks much larger corporate customers, and therefore regularly shortchanges your company on service and responsiveness. You need to change community banks.
  • Willingness to say “yes.” Banks are not all alike when considering loan requests. For instance, banks in your market area usually possess greater understanding of local companies like yours. This may make it easier for them to understand your company’s potential and say “yes” to your needs.
  • Sub-par customer service. You wouldn’t continue doing business with vendors who consistently provide shoddy supplies. Why remain a customer of a community bank that delivers less than superior service? Time to change.

If these or other red flags loom, don't hesitate to change community banks. It’s imperative to your company’s health and your future growth.

What factors would spur you to switch community banks?  

How Will the New Tax Laws Impact Your Business?

18-LB-543 Tax Laws photoHow great an impact the 2017 Tax Cut and Jobs Act will exert on privately held businesses has yet to be realized.  Many feel the economy will benefit from tax reform. Public companies such as Apple, American Airlines, Bank of America and AT&T have given bonuses to employees as a way of sharing the savings from the new tax bill.

Privately held companies can expect several major tax reform impacts. They include a corporate tax cut, greater deduction for capital spending, a deduction for pass-through businesses and simplified accounting.  Let’s explore each element of these tax reforms and the likely effect on your business.

  • Cut in corporate tax rate. The 2017 Tax Reform Act slashes the corporate tax rate from 35 to 21 percent. The reduction will obviously benefit companies already based in the U.S., which will pay lower taxes. Beyond that, other benefits may accrue. Reduced corporate tax rates may spur non-U.S. based companies to move headquarters to the U.S. It may also spur directors to reinvest more of their profits in their companies. Both actions would stimulate the U.S. economy.
  • Simplified accounting. Under tax reform, companies with less than $25 million in annual sales can use less complex accounting methods, including the cash rather than accrual method of accounting. Prior to tax reform passage, companies were prohibited from employing this simplified accounting method unless they had yearly sales lower than $5 million.
  • Expensing capital investment. Increased deduction for capital spending will benefit some, including telecommunications firms. Many believe immediate expensing of capital spending will accelerate investment plans.
  • Deduction for pass-through businesses. Manufacturing and real estate firms as well as architects and engineers will benefit from this tax law provision. The final agreement provides a slight break for some service businesses. It allows them to deduct 20% of certain business income. However, it phases out for service businesses of single filers with income above $157,500 and joint filers with income above $315,000.

What do you believe tax reform’s greatest impact will be on your business?


The Leaders Bank does not provide tax, legal or accounting advice. This material has been prepared for informational purposes only. You should consult your own tax, legal and accounting advisors before entering into any transaction.


How to Turn Referrals into Customers

Many companies embrace the practice of gathering referrals from satisfied customers. But all too often, they expend their greatest energy in generating as many referral leads as possible, rather than in cultivating and converting these leads into regular customers.  17-LB-559 Referrals Blog photo

Putting as much effort into referral cultivation and conversion as into referral generation is key. It can greatly enhance the benefits of gaining referrals. As that occurs, your lead generation becomes a renewable resource.

Here are 3 essential ways to successfully cultivate and convert sales leads.

  1. Stress quality over quantity. Getting to really know a smaller number of well-qualified referrals delivers greater rewards than spreading yourself too thin with a larger number of less qualified leads. The better you get to know your prospects’ priorities and pain points, the more likely you ultimately convince them to become your customers.
  2. Don’t make assumptions. According to marketing experts, non-qualified leads have a closing ratio of 10 percent, referred leads a closing ratio of 60 percent. But that doesn’t mean they’re a lock to buy your product or service. Your company will likely have to carefully nurture those leads to boost your conversion rate.
  3. Remember let referral sources know how much you appreciate their help. Just as referred leads should be viewed as special, so too should the customers offering the leads. Showing special thanks toward referring customers builds trust, solidifies relationships, and brings future leads your way.

 Generating customer referrals is a wise strategy. When equal efforts are made to cultivate and convert those referred leads, you’ll reach the maximum sales potential.

 How do you cultivate referrals from satisfied customers?

Revealed: Keys to Maximizing Cash Flow Efficiency

17-LB-558 Cash Flow blog photoEvery company, large or small, knows access to cash is crucial in managing a successful business. This needn’t mean you must keep large stores of cash on hand. It does mean your company will be healthier when you maximize cash flow.

When every last ounce of efficiency is wrung from your cash flow, your company hums like a well-oiled machine. It accepts customer payments, purchases needed equipment and supplies, pays employees and makes other disbursements without issue or delay.

Here are some shrewd ways to maximize cash flow efficiency. 

  1. Embrace ACH and Wire Collections. When too much time is spent collecting debts or customer payments, cash flow efficiency is sapped. Use of ACH, wire collection, and custom-branded secure online portals speeds payments and ensures more of your cash is available to be used.
  2. Leverage Remote Deposit. Transporting corporate checks, cashier’s checks and money orders to the bank for deposit not only wastes time and effort but is a drain on cash flow efficiency. Your company can avoid these trips by using Remote Deposit to scan and deposit checks from your workplace.
  3. Benefit from a Retail and Wholesale Lockbox. Designate a post office box for collection of customer payments like checks and other remittances. Your bank will collect the payments and deposit them in your account each day.
  4. Use Smart Safes. Currency in your place of business can be credited to your bank account, using up-to-the minute currency verification and storage technology tools.

Maximizing cash flow efficiency isn’t always easy, especially for newer businesses. The sooner you master this ability, the better for your company -- and its bottom line.

What techniques have proven most beneficial in optimizing your cash flow?

Debt Ratio’s Crucial Role in Landing Business Loans

17-LB-556 Debt Ratio blog photoDebt is a critical tool in running businesses. Every company takes on debt in order to establish and grow the enterprise.  While all companies are alike in absorbing debt in some form, they are different in how they manage their debt ratio. This can ultimately spell the difference between business success and failure.

Generally speaking, a lower debt ratio enhances your company’s chances of gaining a commercial loan. Typically, debt ratio is calculated by dividing total liabilities by total assets. The lower debt ratio signals potential lenders the company is not overleveraged and shouldn’t have difficulty paying back any loan awarded. For this reason, companies wanting a commercial loan to grow should be proactive in evaluating and managing their debt ratio.

 Here are some key considerations in helping companies size up and manage debt ratios.

  1. Everything is relative. Whether a company’s debt ratio is regarded as high or low depends on the type of industry in which the company competes. Debt ratios tend to be very high, for example, in pipeline companies and utilities, and lower in technology. Your debt ratio is evaluated against industry averages.
  2. Increase sales revenues. Managing your company debt ratio means keeping it reasonably low. One common way to do that is to generate more sales revenues, either by growing unit sales or increasing prices, resulting in greater cash inflow.
  3. Reduce inventory. Managing debt ratio often includes improving inventory management. Maintaining unnecessary inventory levels can hike debt ratios and hamstring your ability to take on additional debt.

Simply put, a better debt ratio can make you more appealing to lenders. Holding less debt relative to assets also makes good business sense, which is icing on the cake.

If you have any questions about evaluating or managing debt ratio, let’s talk.   

How to Profit From Powerful E-Commerce Trends

It's no secret the way companies conduct business is changing more rapidly than at any time in memory. The reason is e-commerce. With purchases as close as a web search and click away, both B2C and B2B customers have incentive to make online shopping their method of choice.  17-LB-557 ecommerce blog photo

Helping send e-commerce into hyper drive is that online shopping is increasingly mobile and flexible. More buyers are conducting online shopping comparisons and making purchase decisions while on the go. No wonder mobile e-commerce is surging at a 59 percent annual clip, far outpacing desktop e-commerce sales growth rates. All this means your company must stay abreast of powerful e-commerce trends and be prepared to use them to its competitive benefit. Here are some ideas:

  1. Leverage omnichannel marketing. Your customers aren’t just on one device or one channel. To get their attention, it’s smart to promote through multiple channels. Provide customers a consistent corporate experience whether they’re interacting with you through your website, blog or social media.
  2. Offer mobile storefront apps. Fully 86 percent of time users spend on mobile devices is spent on apps, not mobile sites.  Along with an omnichannel presence, ensure your company has a storefront app and a mobile-optimized site.
  3. Embrace video’s power. Whether you’re in construction, healthcare or high tech, video can bring your products or services to life. Recent studies show video marketing can hike click-through rates up to 300 percent and purchase intent almost 100 percent.

With the sands of e-commerce always shifting, the best strategy is to stay nimble and respond to new trends as they emerge. Chances are, some of your competitors will be doing just that.

What e-commerce strategy has worked best for your company?

Research study indicates high marks for Leaders Bank customer experience

17-LB-554 Survey Highlights blog photoLeaders Bank recently asked customers to participate in an independent research survey. The survey’s purpose was to provide insight on how customers perceive Leaders Bank.

Ninety-four percent of respondents to this survey were satisfied with their overall Leaders banking experience. That’s considerably better than the industry average of 79 percent in the 2016 J.D. Power Retail Banking Satisfaction Study. 95 percent indicated they would consider Leaders Bank for future banking needs, and 96 percent would recommend Leaders to a friend or business associate. In addition, more than 95 percent rated Leaders Bank employees “truly outstanding or very good” on professionalism, product knowledge and responsiveness.

The survey also indicated the percentage of customers currently using each of the Bank’s services. Services used most by respondents were deposit accounts, commercial and industrial loans and online banking, followed by treasury management services, mobile banking, commercial real estate loans, and mortgages/home equity loans. 

Here’s a sampling of the survey comments made by Leaders Bank customers:

1.       Customer Joel Stava said “We are a long term account holder, and overall find Leaders to be a steady and reliable bank.”

2.      “The staff at Leaders Bank is fabulous,” said customer Pam Horton. “Customer service is second to none.”

3.      “Thank you for outstanding service and delivery.  I look forward to expanding the relationship as situation warrants,” said customer Scott Crompton.

Does your bank generate the high level of satisfaction enjoyed by Leaders Bank customers?

Keys to successfully managing family businesses

Family-owned or controlled U.S. companies employ 60 percent of workers, and create 78 percent of new jobs. Yet research indicates only about 30 percent of all family-owned businesses make it to the second generation. An even smaller 12 percent will  survive into the third generation. So what can family businesses do to have a better chance of success? 17-LB-555 Family Biz_Blog photo

One key to success is the early identification and nurture of future leaders, whether will be the family’s grandkids or promising non-family employees. A family-owned company’s CEO noted future leaders were once urged to gain experience outside the company, then carry that know-how back to the business. “Now there’s more encouragement to consider working for the company [from the start],” the CEO said.

These are among additional keys to successfully managing family businesses.

  1. Maintain a clear vision. Successfully managing the family business calls for creating a strong sense of shared purpose for both family and non-family members. This helps maintain a consistent focus as each generation replaces the previous one.
  2. Structure leadership roles. Family companies require leadership roles to be efficiently designed, structured and allocated. Making sure these roles are well delineated helps ensure the decisiveness and unity so crucial to success.
  3. Focus on ability, not bloodlines. Many family companies thrive because their leaders recognize non-family members often possess talents family members lack. This improves performance and trims resentment.
  4. Pursue family enjoyment outside work hours. Frequently endeavor to enjoy each other in family events, as opposed to a business environment.

These leadership principles can help your family business from generation to generation. What’s your family company’s most important leadership trait?

How do smart companies maximize treasury management services?

17-LB-552 TM Blog photoWhen companies take advantage of bank-provided treasury management services to keep accounts safe and maximize collection benefits, they can dramatically improve day-to-day operations.

 For example, using fraud protection services and gaining control over collections and disbursements timing made a big difference for two Leaders Bank clients. The two companies, one a commercial screen and sublimation printer and the other a property management firm, leveraged these cash management services in the following ways.

  1. Fraud protection. The companies worked with Leaders to use ACH debit filters in protecting accounts from unauthorized electronic debits. They also leveraged check positive pay to prevent unauthorized checks from clearing their accounts. And because the world of cybersecurity and fraud protection is ever changing, they continue teaming with the bank to ensure their accounts are protected.
  2. Collections and disbursement timing. Using electronic transaction services such as ACH wire originations and remote deposit helped the companies control timing of collections and disbursements. That enabled them to gain operating efficiencies and improved cash flow. It also allowed the companies to provide their own customers with an array of payment channel options, making it more convenient for their customers to do business with them.
  3. Online and mobile banking. The companies leveraged online and mobile banking to effectively monitor accounts and manage cash flow 24-7, which proved beneficial when working remotely or outside normal business hours.

Both companies profited from gaining optimal benefit from treasury management services. The property management company, for instance, was able to pull payments in a more efficient, timely manner, which helped streamline its cash flow. 

How are you deriving maximum benefit from treasury management services?